MANAGEMENT OF TECHNOLOGY – BPT 3113
TECHNOLOGY LIFE CYCLE
Chapter Outline• Introduction• Technological Progress• Technology Life Cycle
– S-Curve– Market Growth– Product Life Cycle– Multiple-Generation Technologies
• Technology and Market Interaction• Diffusion of Technology
Lesson Outcomes• Understand the context of technology life
cycle• Explain the importance of technology life
cycle for organization planning and strategic analysis
• Know the process of technology diffusion
Introduction• The performance of a technology has a
recognized pattern over time• Can be of great use in strategic planning• Neglecting this pattern as a key factor in the
planning process may prove very costly to the competitive position of corporation
• Managing technology requires deep understanding of the life cycles of the technology, product, process and system
• The life span of various technologies can be conveniently identified as consisting of distinct stages
Stages in Technology Life Cycle
3-Stages 4-Phases 6-Phases
EmbryonicInnovation Technology Development Phase
Syndication Application Launch Phase
Growth Diffusion Stage Application Growth Phase
Maturity Substitution
Mature-Technology Phase
Technology Substitution Phase
Technology Obsolescence Phase
Technology Life Cycle : S-Curve
S-Curve : Technological Progress• A technology’s improvement of performance follows the S-
curve• Technological performance can be expressed in terms of
any attribute : aircraft speed in km per hour or number of transistors per chip
• Innovation:– Represents the birth of new product / process resulting
from R&D activities spending significant amounts of effort and money to create the technology
• Syndication:– Represents the demonstration and commercialization of
a new technology characterized by a period of slow initial growth
• Growth:– Represents the market penetration of a new technology
through acceptance of the innovation by potential users of the technology characterized by rapid and sustained growth
• Maturity:– The period starts when the upper limit of the technology is
approached and progress in performance slows down– Technology reaches its natural limits as dictated by factors
such as physical limits– Example : Vacuum-tube technology was limited by the tube’s
size and the power consumption of the heated filament – transistor technology will start a new life cycle
– Concept in MOT : When a technology reaches its natural limits, it becomes a mature technology vulnerable to substitution or obsolescence
S-Curve : Technological Progress
• A technology’s rate of performance improvement is dependent on the effort devoted to its development
• Technology may progress on curve A or A’, depending on a number of factors including the type of the technology itself and the cost and time devoted to its development
• A newer technology, B has a higher limit of performance for the same parameter – may progress at a faster rate and will influence the progression of A and A’
• At a certain point in time it will replace the earlier technology
Changes in Natural Limits of Technology
S-Curve : Technological Progress
TLC & Market Growth• When technology reaches the market, it generates income
Market Growth at Different Stages of the Technology Life Cycle
A. Technology Development– Market does not recognize the technology at all– It has zero response– Spending significant amounts of effort and money to
create the technology, develop prototypes and test the new technology – should reduce this time period
B. Application Launch– Market volume follows the path of technological progress– Characterized by slow initial growth followed by rapid
growth
C. Application Growth– Penetration into the market will depend on the rate of
innovation and the market needs for the new technology
TLC & Market Growth
D. Mature Technology – Growth rate slows down as the technology approaches
its maturity– Market volume will peak and then start to decline
E. Technology Substitution– Companies that continue to use the old technology in
this phase will be faced with a shrinking market share and fall in revenues
F. Technology Obsolescence– Technology has little or no value
TLC & Market Growth
Product Life Cycle
A : Concept Design PrototypeB : Product LaunchC : Product Growth
D : Mature StageE : Substitution ProductsF : Product Obsolescence
TLC with Process Innovations
Progress of technology is shown in relation to product and process innovation
Multiple-Generation Technologies
Multiple-Generation Technologies• Technology has a hierarchy• System No. of Subsystem No. of Components • Technology can consist of multiple technologies
and derive from different generations of innovation
• Example:• System – Computer• Subsystem – Microprocessor (286, 486, Pentium,
Core 2) • Each of these generations of innovation helped
boost the technology life cycle
• Science-Technology Push Science provides the base for technological
development which in turn creates new markets Innovations that ensued from the technologies
caused major industry upheavals and totally changed the markets
Technology and Market Interaction
Technology Scientific Discovery
Nuclear energy Based on Einstein’s 1905 paper, which established the equivalence of mass and energy
Transistors Based on A.H. Wilson’s 1931 theory of semiconductors
Electronics Based on Maxwell’s theory of electromagnetism, developed in the 1880s
Genetic engineering Followed Watson and Crick’s 1952 discovery of the structure of DNA
Technology and Market Interaction• Market Pull
Technology is often developed to meet a market need or demand – stimulated by consumers
Most of the technological developments stimulated by market pull are of an incremental nature or represent improvements to existing technologies
It have a cumulative effect and can have a tremendous impact on productivity and competitiveness
May provoke major breakthroughs when there is a strong collective demand for a solution to a specific problem. Example: Vaccine for H1N1
Technology and Market Interaction
Combined Effect of Technology Push and Market Pull
Technology and Market Interaction• Integrating Technology Push and Market Pull to
Stimulate Innovation
InnovationOpportunities for Technology Push
Opportunities for Market Pull
• Scientific discoveries
• Applied knowledge
• Recognized needs• Intellectual capital (scientists & engineers)
• Market demand• Proliferation of application areas
• Recognized needs• Opportunities for increased profitability, quality & productivity
• Entrepreneurs
Diffusion Of Technology• Diffusion is the process by which an innovation is
communicated over time through certain channels to members of a social system [Rogers, 1995]
• Rate of adoption of an innovation by members of a social system is dependent on the degree to which the innovation:a. Is perceived to be offering better advantage than does
existing practiceb. Is compatible with the values and needs of the usersc. Is considered complex and difficult to used. Can be introduced on a trial basis before users must
fully commit to its adoptione. Is seen and its results are observed by potential
adopters
The Diffusion-Communication-Channel
Relationship• Adopters of an innovation are influenced by two types of
communication channels:a. Interpersonal word of mouth
Number of users expands during the early phase of the diffusion process and declines during the second half
b. Mass media channelsGreatest in the early phase of diffusion but occurs continually throughout the diffusion process
The Diffusion-Communication-Channel
Relationship• The decision to adopt an innovation by an
individual or an organization takes a certain period of time and consists of several stages
Innovation Decision Time